Optimal fiscal and monetary policy: equivalence results

Isabel Correia (), Juan Pablo Nicolini and Pedro Teles

No 403, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: In this article, we analyze the implications of price-setting restrictions for the conduct of cyclical fiscal and monetary policy. We consider standard monetary economies that differ in the price-setting restrictions imposed on the firms. We show that, independently of the degree or type of price stickiness, it is possible to implement the same efficient set of allocations and that each allocation in that set is implemented with policies that are also independent of the price stickiness. In this sense, environments with different price-setting restrictions are equivalent.

Keywords: Monetary policy; Fiscal policy (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (75)

Published in Journal of Political Economy 116 (February 2008): 141-70

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Related works:
Journal Article: Optimal Fiscal and Monetary Policy: Equivalence Results (2008)
Working Paper: Optimal Fiscal and Monetary Policy: Equivalence Results (2003)
Working Paper: Optimal Fiscal and Monetary Policy: Equivalence Results (2003)
Working Paper: Optimal fiscal and monetary policy: equivalence results (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:403

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